Summary
- T. Rowe Price Group is a large asset manager that offers a wide range of financial services.
- The company has a history of consistent growth and 37 consecutive dividend hikes, making it a Dividend Aristocrat.
- Despite recent stock price weakness, TROW presents a compelling opportunity for income growth and value, with a high yield of 4.5% and a projected recovery in EPS growth.
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Introduction
It’s time to talk about a company I have never discussed before. That company is the T. Rowe Price Group (NASDAQ:TROW), one of the world’s largest asset managers and a company whose stock price has lost roughly half of its value from its prior peak, as we’ll discuss in the valuation part of this article.
When it comes to stocks in the financial sector, I prefer to invest in service-based companies over banks, which account for roughly a quarter of the sector’s exposure – using State Street’s (XLF) ETF as a benchmark.
Although I have nothing against banks, I, generally speaking, dislike their risk/reward due to often low-moat business models and severe sell-offs during recessions.
Since January 2010, the S&P 500 has returned 478%, beating the 176% return of the SPDR S&P Bank ETF (KBE) by a huge margin. Financial stocks returned 330%. TROW returned just 219%, which is mainly the result of poor performance over the past two years.
